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When will interest rates go down?

Journalist: Jake Carter, Mortgage Introducer

ended 08. August 2023

Google searches for 'when will interest rates go down' has exploded by 487% in the last 12 months, according to L&C Mortgages. 

When do you expect interest rates to fall?

Has the base rate peaked now?

What are your longer-term expectations for the market?

 

 

10 responses from the Newspage community

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Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Whilst the market expects at least one more Bank of England base rate rise. Lenders and the swap rates have already assumed this within their forecasts. So unless anything out of expectation occurs I believe the fixed rates have already peaked and should start to reduce slightly over the coming months. However, it is worth stating I do not believe we will see the low rates sub 2% for a very long time, if ever. Longer term rates of around 4% will be the market normal.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Interest rates could well be peaking before the end of this year, and the debate is now on when rates will start to fall. We cant, underestimate what impact inflation has on the global markets, and the target of 2% inflation, does seem some way off yet. I would expect to see a flattening of interest rates towards the end of the last quarter of this year, however, 2024 is still very much unpredictable in terms of rate reductions. I see 2024 being very much a flat year for any rises or reductions and I think 2025 could be the year we see any level of consistent reductions.
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Elliott Culley
Director at Switch Mortgage Finance
No doubt the increase in this question is down to worried mortgage owners hoping by the time their renewal is due that rates have dropped. We have seen some positive first steps over the last couple of weeks. Better than expected inflation figures and a rise of only 0.25% to the base rate have helped to steady the market. The Bank of England still suggested there are some base rate increases to come, but mortgage lenders seem to have priced this in when looking at the current mortgage rates. The Bank of England is now predicting that inflation stays above 2% for longer than originally predicted, I'd predict as a result mortgage rates may come down much slower as a result. Provided the forecast is correct and inflation continues its downward arc, we should see a steady drop in mortgage rates, albeit not to the low rates of the recent past. If inflation slows down again we could see a repeat of June where rates start to rise again.
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Russell Maggs
Mortgage & Protection Adviser at Maggs Financial Services
A political cynic would argue that interest rates may start to fall ahead of next years general election. That has certainly been the case historically and would call into question the "independence" of the Bank of England from The Government.
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Gary Bush
Financial Adviser at MortgageShop.com
Everyone wants to know the answer to this question - I'd focus my response on the fixed-rate mortgage market and confirm that for the last 2 weeks, they have thankfully been decreasing. The longer-term vision on fixed mortgage rates will come with the next UK inflation figures which are due out early on the morning of 16th August. We personally expect to see another reasonable drop in inflation, fingers crossed.
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Lee Gathercole
Co-Founder at Rebus Financial Services
I think with inflation starting to fall we are now close to seeing the peak of interest rates I can't imagine there will be any huge increases in rates (if any) in the near future, there is some light at the end of the tunnel. However it sounds like the Bank of England is going to be quite stubborn when it comes to dropping rates, I think we will see them hold steady between now and the end of the year and may see them dropping next year once the inflation target is met.




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Paul Welch
Founder and CEO at Largemortgageloans.com
I would expect interest rates to start to fall next April once we have passed the peak which may be much closer now , at 5.5/5.75%.

In my opinion, the new normal will be between 3.5% and 4.25% with the Bank of England guiding us that rates will be higher for longer.
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Kirsty Wells
Director at Blueprint Mortgages & Protection
I expect the base rate to go up again by 0.25% but will then start to go down.

I’m hopeful that rates will start to fall towards the end of 2023 and will continue to decrease slowly throughout 2024.
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Austyn Johnson
Founder at Mortgages For Actors
Personally, thinking about how much money the gov needs to make back from the covid era, it will stay relatively high for a while longer. Maybe 2-3 years before it falls a bit more. They need to make back around £410b, so its a fair cop that the higher rates will be around for a while.
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David Robinson
Co-Founder at Wildcat Law
Back to the future or more specifically 1980; beware the spectre of stagflation! Interest rates have been forced higher by inflation but the looming storm on the horizon is the prospect of business failures as they struggle to obtain affordable working finance or pass on the cost of higher input costs to already over-stretched consumers. This in turn will trigger a rise in unemployment. The main reason we have not seen this so far, has been that many vulnerable businesses ceased trading due to Covid. This left healthier more resilient businesses which have so far weathered the storm, but this ship can only take so much before it starts to sink.
Until inflation stabilises and falls the BOE will continue to raise rates but as we get closer to a general election expect to see political pressure being brought to bear on all fronts.